Rent-mania: Want to live in Manhattan? You better think twice.
The median rents in New York City are reaching record highs, according to the latest data, in some cases triggering bidding wars for, well, some pretty mediocre properties.
"Asking rent has been breaking new records across the city since April," said Kenny Lee, an economist at StreetEasy. The market has been tough, a lot tougher than before."
Per Lee and StreetEasy, the rental market peaked this June in Manhattan. The median listing price in Manhattan hit $4,396 per month. And in both Brooklyn and Queens, the median asking rents were $3,400 and $2,850, respectively, according to StreetEasy. June’s median rents are the highest in all three boroughs since January 1, 2010, when StreetEasy started tracking.
(Note: Median rent is the mid-point value of sampled listings. This means 50% of sampled listings are priced higher, and 50% are priced lower.)
New York City’s median asking rent, including all five boroughs, reached $3,750 this June, a 7.1% year-over-year increase. Compared to when the pandemic emptied the city two years ago, the median asking rent soared 33.5% from $2,495 in March 2021, according to StreetEasy. Tenants living in Manhattan are seeing an even bigger jump of 37% to $4,396 in June from $2,760 in January 2021. Since the pandemic, Brooklyn and Queens also saw double-digit rent growth at 29.4% and 29.8%, respectively.
The elevated prices, especially in Manhattan and Brooklyn, are substantially higher than the nation’s average. Manhattan’s rent is already twice the nation’s average asking price for rentals of $2,048, according to Zillow’s rental tracker.
The result? A feeding frenzy.
"Just a few days ago, I had a studio listing on the Upper West Side," Tiga McLoyd, a New York City-based real estate broker with Corcoran, told Yahoo Finance. "There were 11 applicants for the unit, and seven people participated in a bidding process."
Even though the listing price for McLoyd's unit was $2,475 per month, the highest bid reached $2,800 — or $325 more than asking. The four-flight walk-up was a gem, according to McLoyd, due to its location near Central Park, the subway station, Trader Joe's, and Equinox. And although the unit does not have a washer or a dryer, it does have a separate kitchen with a dishwasher, a rarity for studios under $3,000 in the Upper West Side.
"If you have a $3,000 budget on the Upper West Side and want something nice, it might get a little more competitive," McLoyd said.
Fun City, USA
What’s behind the numbers?
"So I kind of call it the COVID bounce-back," McLoyd said, "and it really hasn't stopped happening." Many companies in the Big Apple are adapting to the hybrid work model, where employees work in the office and from home.
"It's true New York City lost a lot of residents in 2020 and 2021. A lot of people left the city in search of just more space, a backyard, or front porch," Lee said. "But I think the situation has really reversed across the Northeast, including New York City. And that's precisely related to returning to office at least part-time."
Companies not in the city are also contributing to the rent increase. McLoyd said he had met renters who were able to move to New York City because they can work remotely,
"You got all these new people from interesting places like the California, Midwest, and Texas, who are now able to work remotely from anywhere," McLoyd said, "So that crowd of people moved to New York."
Gen Zers account for the largest cohort moving to the Empire State, according to a Today’s Homeowner report published in 2023. Overall trends show Gen Zers are attracted to big cities like New York, with over 43,104 individuals moving in and a net migration of 3,043. The number of Gen Zers that left California was 50,615; 21,535 in Minnesota; 36,782 in Chicago; and 5,268 in Louisiana, Today’s Homeowner report showed.
New York is apparently a draw for young movers: "It's fun," McLoyd said.
Strong demand but little availability
The city may be fun, but finding a rental is definitely not.
"After the global financial crisis, the city has added more than half a million jobs but only created about 300,000 new homes in New York City," Lee explained.
In fact, the number of available rentals in Manhattan, Brooklyn, and Queens decreased compared to pre-pandemic years. Brooklyn saw the sharpest decline at 35%. The average available units in 2023 dropped to 9,902 from 15,230 in 2018. Manhattan saw 4,340 fewer units, or a 22% drop, over the same period, and Queen's was 21.4% lower, or 1,112 fewer units. Rental supply in the Bronx and Staten Island stayed relatively flat in the last five years, according to data published by StreetEasy.
"It's hard to see where [inventory crunch] is going to stop because New York City just isn't building any new housing," McLoyd said.
The city's vacancy rate gives a similar narrative. Although Manhattan's vacancy rate increased to 2.78% in June 2023 from 1.90% a year ago, a healthy vacancy rate should sit around 5%-8%, according to the US Lending Company.
"The lack of inventory coming into the market, as well as the strong demand from renters, is destroying the market and creating intense competition for renters," Lee said.
The bottom line: "It's a basic, old school supply and demand scenario," McLoyd said.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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